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Local railway management is facing severe problems in Japan. Especially in rural areas, the number of rail users has decreased since the 1970s not only because of depopulation but also because of rapid motorization. Therefore, many local railway companies have decided to abolish lines that are unprofitable under such difficult conditions. However, although public investment by a municipality is considered indispensable for supporting local railways, research is lacking on the non-market value of local railways as an authority of public investment. It is therefore necessary to clarify certain social situations in relation to the conditions caused with-without and before-after political actions based on a basic policy evaluation. However, this analysis is difficult because local railways as common social capital are highly probable to possess both market and non-market values.In this study, we examined the Hitachi Railway System, which was abolished six years ago, and considered the influence of this abolition on factors such as residents' means of transportation, lifestyles and outlooks. To understand these issues, we conducted a questionnaire survey by mail for a part of residents living near the railroads in rural areas in November 2010. The main items in the questionnaire were concerned with 1) individual attributes of respondents, 2) frequency of travel before the abolition of the railway, 3) possible and actual alternate means of transportation, 4) possible and actual increase or decrease in the frequency of outings, 5) possible and actual increase or decrease in compensation for travel, 6) possible and actual perception of the impact of abolition of the railway on the region, and 7) views for and against abolishing the railway before and after its occurrence. The collection rate was 39 percent.The results of this study were as follows. First, residents with a driver's license and who used the Hitachi Railway had relatively accurate views about the social situations that resulted from abolishing the railway. For example, their views on the frequency of people's outings and compensation for travel were more accurate than persons who did not possess a driver's license or who did not use the railway. Second, there were gaps in transportation convenience with the introduction of substitute or regular buses, and resident views of punctuality. Approximately 10 percent of the respondents that assumed they would use buses as an alternate means of transportation now use a family car or taxi. Third, the abolition of the railway had impacts on the lifestyles of residents regardless of their previous methods of transportation or use of the railway. This suggests that local railways function as a local symbol. On the basis of these results, a discussion that is not confused by fragmentary information or value judgments is needed to determine whether to continue or abolish a railway.JEL Classification: R11
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